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It depends on state, they vary as to their cap. To be exact, I think Texas is at 26.5%.
Well, if everyone paid their bills on time, that might be viable (10%), but we both know that isn't the case and many people are just incredibly irresponsible, even when they have the money to pay. I have heard stories of guys pulling in 16k a month, having to take a high risk loan and they STILL pay late and are problems for the collectors.
As it is now, sure... it is high in some states, but at least irresponsible people still have a chance to get a loan, even if it is expensive. They cap it at 10% and nobody would loan to the high risk people anymore as it would be a lose/lose business. These people cost businesses a lot of money and if they can't charge penalty fees and high interest for them, well... it isn't worth the time.
Personally, I think government should stay out of it. As long as a person isn't "forced" to a deal, it should be up to them as to how much they are willing to pay.
It's actually 27%, so I stand corrected. We were told 24.99% in our training, but that might be so we offer more uniform APR's throughout the nation.
In my opinion, someone who pulls in $16k a month who pay late on their loan shouldn't be allowed a loan. In all reality, there's a reason why there is a cap on the APR, I just disagree on where that cap should be.
And at the end of the day, having seen how this works from the inside, both from the dealer and the lender perspective, I know how much the banks rake in, even on a 10% APR loan, especially if they pay late a few times.
And though I agree no one puts a gun to anyones head, it's still preying on the weak and less fortunate. The people I meet who finance at rates that high generally aren't people who make tons of money but act irresponsibly, it's people who's been through some bad times and trying to get back on their feet or people who are too dumb to know any better.
Quote:
Originally Posted by NJGOAT
lol, at what point exactly does it become usury?
Definitely. My examples were very simplistic and there is much more variability then that. Different banks will have different comissions, etc. I personally expect the dealer to pick what works best for them.
Interestingly enough, Forbes did a study a couple years back when they looked at interest rates on loans negotiated through a dealer vs. loans people negotiated themselves through a bank or credit union. They excluded manufacturer incentive offers and found that, on average, dealers actually get their customers slightly better rates then the customer can get themselves.
I think it becomes usury long before 20%, that's for sure. It's obviously a matter of personal opinion, and my opinion would be that 10% APR is high enough. It strikes a good balance of not preying on people and their mistakes and fattening the wallet of already highly profitable banks.
I want to help my mother payoff her car note, but her story sounds a bit fishy to me.
Could someone with lots of car experience let me know if the following is possible… could someone REALLY get ripped off this badly or does it sound like my mother isn't being honest with me. I've always paid cash for older cars, so I don’t know the ropes when it comes to making monthly car notes.
Here it goes…
* In 2006, when she bought the car, the price tag price was $18,000.
* I think she said her interest rate was 23%.
* She paid a $1,000 down.
* Monthly payments were $490 for 6 years. $35,280 for 6 yrs + $1000 = $36,280 total.
* She’s paid a bit more than that on the car however. Maybe about $38,000 to $40,000.
And she said she still owes close to $7,000 on the car. Overall, she’s telling me that she’ll have to pay about $48,000 for a $18,000 car. $30,000 more than it is worth. Is this possible?
Obviously your mother is very, very bad with her money. The best thing she could do at this point would be to sell her car and buy an inexpensive car with cash.
She really needs to get a handle on her money. I strongly recommend that she read "Your Total Money Makeover" by Dave Ramsey and possibly attend Financial Peace University (which is held at local churches, she can call around to find one).
I hope the OP does start another thread about this, over in 'Relationships'. The mom is what I call a Professional Victim. Doing what you're told to do by authority figures is very important to 'Good Girls'/'Professional Victims'. And I think her criticism of her Daughter's assertiveness is also part of it. I'm sure the mother cringed onto the car lot, and in-tremolo, asked to see a little car she could afford. The nice man wearing the tie (man... necktie... desk... 'Authority Figure') told her what to do, and she gratefully smiled and signed where he told her to sign ... obeyed.
Maybe I'm using the term wrong, though. Anybody else have a better term to describe women who feel it's their 'place' to be 'obedient'?
One of my friends has a 'Greatest Generation' aunt, who has always thought that some institution was the answer to every facet of life. You go to Church for "strength". You go into a nursing home, simply because you're supposed to, at a certain age, you join this club, you join that club, you ask your Preacher what you're supposed to do about every one of life's little dilemmas... You 'counsel' your relatives about taking those dangerous vitamin pills by saying, "You should ask your Doctor about taking Vitamin C." She has allowed the part of the family's empire under her watch to be run down to nothing, simply by her passivity. She's always, even at 80, deferring to one "Daddy" type or another.
Yes, 23 percent interest is the direct cause of the problem at hand. But pathological passivity, I think... for lack of better terminology... is the root cause of this problem. I'm really struggling for the words to use, here.
I think OP needs to realize that Good Girl Mommy has a problem. And Good Girl Mommy needs to own up to the fact that she's mentally unsuited to be making financial decisions on her own: that her conditioning in early life has left her an easy victim of the unscrupulous (or anybody sitting behind a desk... or wearing a necktie).
And Good Girl Mommy's attacks upon her assertive daughter need to stop.
I hope the OP does start another thread about this, over in 'Relationships'. The mom is what I call a Professional Victim. Doing what you're told to do by authority figures is very important to 'Good Girls'/'Professional Victims'. And I think her criticism of her Daughter's assertiveness is also part of it. I'm sure the mother cringed onto the car lot, and in-tremolo, asked to see a little car she could afford. The nice man wearing the tie (man... necktie... desk... 'Authority Figure') told her what to do, and she gratefully smiled and signed where he told her to sign ... obeyed.
Maybe I'm using the term wrong, though. Anybody else have a better term to describe women who feel it's their 'place' to be 'obedient'?
One of my friends has a 'Greatest Generation' aunt, who has always thought that some institution was the answer to every facet of life. You go to Church for "strength". You go into a nursing home, simply because you're supposed to, at a certain age, you join this club, you join that club, you ask your Preacher what you're supposed to do about every one of life's little dilemmas... You 'counsel' your relatives about taking those dangerous vitamin pills by saying, "You should ask your Doctor about taking Vitamin C." She has allowed the part of the family's empire under her watch to be run down to nothing, simply by her passivity. She's always, even at 80, deferring to one "Daddy" type or another.
Yes, 23 percent interest is the direct cause of the problem at hand. But pathological passivity, I think... for lack of better terminology... is the root cause of this problem. I'm really struggling for the words to use, here.
I think OP needs to realize that Good Girl Mommy has a problem. And Good Girl Mommy needs to own up to the fact that she's mentally unsuited to be making financial decisions on her own: that her conditioning in early life has left her an easy victim of the unscrupulous (or anybody sitting behind a desk... or wearing a necktie).
And Good Girl Mommy's attacks upon her assertive daughter need to stop.
I think someone's reading a little too much into the post. I'm more inclined to think that either (a) Mom is naive about financial matters and just didn't stop to think how much the loan was going to cost her, or (b) Mom was desperate for a car and couldn't qualify for a loan from a traditional lender.
I haven't read all the comments, but in addition to getting really exploited on the interest rate it's possible she traded in a car that she was upside down on, so that in addition to paying off the purchase price of the new car she was paying the remaining balance on her previous car loan.
I haven't read all the comments, but in addition to getting really exploited on the interest rate it's possible she traded in a car that she was upside down on, so that in addition to paying off the purchase price of the new car she was paying the remaining balance on her previous car loan.
I had thought of that, but the OP said she put $1000 down so I assumed there was no trade. But you are correct, it happens all the time.
I haven't read all the comments, but in addition to getting really exploited on the interest rate it's possible she traded in a car that she was upside down on, so that in addition to paying off the purchase price of the new car she was paying the remaining balance on her previous car loan.
Quote:
Originally Posted by duster1979
I had thought of that, but the OP said she put $1000 down so I assumed there was no trade. But you are correct, it happens all the time.
Unfortunately the maths adds up!
She made a bad decision buying this car and a even worse decision refinancing it.
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